DOUBLE YOUR AMBULATORY PLATFORM

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1 KEY STRATEGIES TO DOUBLE YOUR AMBULATORY PLATFORM BY 2020 Chris Bishop CEO

2 OUTPATIENT EXPANSION Healthcare market is at a tipping point Innovators are committing significant resources to outpatient growth 40% growth in urgent care centers over the last 2 years Will spend an additional $3 Billion on outpatient expansion this year Purchase of USPI Will spend an additonial $ Million annually on outpatient growth Outpatient now accounts for 28% of Tenet s EBITDA vs. 5% in 2014 Somebody else is going to do it to us if we don t do it ourselves Trevor Fetter, CEO, Tenet Health Source: WSJ, Hospitals Invest in Outpatient Clinics, Sept. 26, 2017

3 REGENT SURGICAL HEALTH Founded in 2001 Led partners through major market evolutions: Development, Turnaround, Hospital/Physician Joint Ventures, Hospital Ambulatory Strategy, HOPD Conversions Among the first to: bring new procedures to outpatient setting, develop OON strategies, develop centers for TJR, implement bundled payments Today s focus: helping hospitals race toward value-based care with ambulatory surgery strategies

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5 HOW FAST ARE YOU MOVING TOWARDS VALUE-BASED CARE?

6 MOVING TOWARDS VALUE-BASED CARE Cardiovascular Centers Employed Physician Ownership Total Joints Replacement Value- Based Care HOPD Conversions Bundled Payments Shift to Value IP ORs are considered cost center and targets for reduction by payors/risk bearing entities (ACO/CIN) Reimbursement Shifts CMS approving new procedures for outpatient setting (by removing IP only designation) and narrowing gap b/w ASC and Hospital Rates. Move toward bundled payments and risk-based contracts. Outpatient Capabilities Technology, smaller incisions, and advances in anesthesia and pain management techniques encourage more cases to go outpatient. Physician Preference Better alignment of incentives with Physician Ownership. Physicians have better control and material financial returns. Patient Preference Provides lower costs for those with high deductible plans. ASCs tend to be more convenient, less crowded, and less confusing than hospitals.

7 20 pledge to convert 75% MAJOR HEALTH SYSTEMS & PAYORS OF BUSINESS to valuebased arrangements BY 2020 According to chairman of the taskforce, CEO Richard Gilfillan, MD, of Trinity Health

8 PROJECTED GROWTH IN THE OUTPATIENT SPACE SG2 Research projects by 2026, 51% of primary hip and knee joint replacements will be performed in an outpatient setting

9 EXAMPLE: 90 DAY TJR BUNDLE

10 DEVELOPING A BUNDLED PAYMENT STRATEGY Site of Service Optimization Surgical Costs comprise 30% of every healthcare premium dollar spent ASCs Site of Service is consistent with Triple Aim Objectives lower cost, higher quality, better patient experience Physician Alignment is Critical to Success Effective management of a surgical episode requires heavy surgeon involvement Aligning incentives to engage physician s will be critical to long-term success

11 WHO WILL PAY FOR THE BUNDLE? Initial growth was slow, but some health systems and Physicians are beginning to see the advantages CMS Self-Insured Employers Commercial Pilots around TJR BPCI CJR Lowes PBG Bridgehealth Cigna United The Blues

12 1 STRATEGY DEVELOPMENT Framework Physician Alignment 2 4-YEAR PLAN Target Markets Ambulatory Toolbox 3 4-YEAR PLAN EXECUTION Capabilities & Speed to Market

13 HUB & SPOKE MODEL

14 STRATEGY Managed Care Define current position Outline 4-year reimbursement strategy (FFS and Value Based Options) Bundled Payments ACO Population Health Assessing Physical Assets Physician alignment Employed vs. independent Service line development

15 DEVELOPING A PLAN Target Markets Find an Expert(s) Turbo Charge Development Assessing Physical Assets

16 SPIDER WEB MODEL

17 DEVELOPING A PLAN Target Markets Find an Expert(s) Turbo Charge Development Assessing Physical Assets Ambulatory Toolbox JV Ambulatory Campus Outpatient ED Telemed De Novo Urgent Care MOB Micro-hospital Acquisition Imaging Cancer treatment Birthing Center Standalone ASC HOPDs Dialysis HOPD Conversion

18 HOPD TO ASC JOINT VENTURE CONVERSIONS In support of a larger value-based care strategy Hospitals now support moving cases to ASCs as they take on risk with new payer contracts In CON states, regulations to convert existing HOPD may be easier than building de novo As a growth strategy drive volume by partnering with independent or splitter surgeons As a retention strategy retain partnerships with key surgeons looking to partner with a competitive health system or develop their own The key is to identify incremental case volumes through strategic physician alignment AND use the hospital's strength to leverage rates

19 CARDIOVASCULAR LAB PROCEDURES Diagnostic Procedures Interventional Procedures Electrophysiology Other Vascular Procedures Angiography Coronary Angioplasty Pacemaker Placement Varicose vein Noninvasive Diagnostic Cardiology MRI Carotid Ultrasound Exercise Stress Testing Non-invasive vascular imaging Stenting Artherectomy Septal Closure Devices Thrombectomy Peripheral angioplasty Carotid angioplasty Defibrillator (ICD) Placement Implantable Loop Recorder Cardioversion Cardiac Ablation ablations Venous access for dialysis Renal artery angioplasty Venous angioplasty

20 EXECUTION Expertise Identify the expertise needed and find an expert Speed JV Services you know you can t execute quickly Strategy Develop and work from a 4 year strategy and plan

21 AMBULATORY ASSESSMENT POTENTIAL ACQUISITION TARGETS PHYSICIAN RECRUITING CASE MIX / VOLUME ASSESSMENT MANAGED CARE ANALYSIS ASC DESIGN CONSTRUCTION BUDGET OPERATING / STAFFING BUDGET COST TO INVEST / REVENUE PROJECTIONS / ROI PROJECTIONS

22 THANK YOU! Stop by booth #34 to connect with a member of the Regent team or schedule a 20 minute assessment. Chris Bishop cbishop@regentsurgicalhealth.com